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Versabank (TSE:VBNK)
TSX:VBNK
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Versabank
(TSX:VBNK)
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Rating:73Outperform
Price Target:
C$17.50
▼(-0.91% Downside)
Versabank's strong financial performance and positive earnings call highlights are tempered by technical indicators suggesting potential bearish sentiment and modest valuation metrics. The company's ability to manage liabilities and maintain consistent cash flow will be crucial for future performance.
Positive Factors
Negative Factors
Versabank (VBNK) vs. iShares MSCI Canada ETF (EWC)
Market Cap
$574.28M
Dividend Yield0.57%
Average Volume (3M)27.36K
Price to Earnings (P/E)18.6
Beta (1Y)1.32
Revenue Growth4.19%
EPS Growth-46.14%
CountryCA
Employees121
SectorFinancial
Sector Strength70
IndustryBanks - Regional
Share Statistics
EPS (TTM)0.30
Shares Outstanding32,518,787
10 Day Avg. Volume23,465
30 Day Avg. Volume27,365
Financial Highlights & Ratios
PEG Ratio-2.68
Price to Book (P/B)1.36
Price to Sales (P/S)1.85
P/FCF Ratio2.14
Enterprise Value/Market Cap0.31
Enterprise Value/Revenue0.59
Enterprise Value/Gross Profit1.55
Enterprise Value/Ebitda4.14
Forecast
1Y Price Target
$17.02Price Target Upside-3.61% Downside
Rating ConsensusModerate Buy
Number of Analyst Covering3
Versabank Business Overview & Revenue Model
Company DescriptionVersaBank, a schedule I chartered bank, provides various banking products and services in Canada. The company offers deposit products, such as guaranteed investment certificates, registered retirement savings plans, daily interest savings accounts, and tax-free savings accounts, as well as deposit insurance products. It also provides lending services, including point of sale financing that involves purchasing loan and lease receivables from finance companies operating in various industries; and commercial banking services comprising commercial real estate, public sector/infrastructure financing, condominium financing, and residential mortgages. The company was formerly known as Pacific & Western Bank of Canada and changed its name to VersaBank in May 2016. VersaBank was incorporated in 1979 and is headquartered in London, Canada.
How the Company Makes MoneyVersabank generates revenue primarily through interest income from its loan portfolio, which includes commercial loans and mortgages. The bank also earns interest from its investments in securities and other financial instruments. Additionally, Versabank offers deposit accounts that provide interest income while attracting customer funds. Key partnerships with technology providers enhance its digital banking capabilities, allowing for streamlined operations and improved customer service, which can lead to increased customer acquisition and retention, further boosting revenue.
Versabank Earnings Call Summary
Earnings Call Date:Sep 04, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Dec 10, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted significant achievements such as record revenue, asset growth, and an increase in net interest margin. However, this was tempered by the impacts of foreign exchange losses, costs from structural realignment, and a decline in cybersecurity revenue. The positive elements are significant, but the lowlights are notable and impactful.Q2-2025 Updates
Positive Updates
Record Revenue and Asset Growth
VersaBank reported record total assets of over $5 billion, a 15% year-over-year increase, and record consolidated revenue of $30.1 million, up 6% year-over-year and 8% sequentially.
Expansion of Net Interest Margin
Net interest margin on credit assets increased 23 basis points sequentially, driven by favorable trends including the replacement of maturing higher interest rate term deposits with lower rate ones.
Strong U.S. Receivable Purchase Program Performance
The U.S. RPP portfolio surpassed USD 70 million in drawdowns by the end of the quarter, contributing to the growth in credit assets.
Canadian Residential Construction Loan Portfolio Growth
There was growth in the Canadian residential construction loan portfolio, contributing to the overall increase in credit assets.
Increase in Book Value Per Share
Book value per share increased to a record $16.25, indicating an increase in shareholder equity.
Negative Updates
Impact of Foreign Exchange Translation
The bank experienced a large unrealized noncash loss due to a precipitous drop of the U.S. dollar versus the Canadian dollar, negatively affecting income.
Preliminary Costs for Structural Realignment
The bank incurred $900,000 in preliminary costs associated with the proposed structural realignment, affecting net interest expenses.
Decrease in Cybersecurity Revenue
DRT Cyber's revenue decreased to $1.8 million from $2.3 million in Q2 of last year, and the segment reported a net loss of $652,000.
Increased Provision for Credit Losses
Provision for credit losses increased to 0.08% of average credit assets, higher than the 12-quarter average of 0.02%, due to increased uncertainty in the economic outlook.
Company Guidance
In the call discussing VersaBank's second quarter fiscal 2025 financial results, several key metrics and strategic initiatives were highlighted. The bank achieved record total assets of over $5 billion, a 15% increase year-over-year, and record credit assets of $4.52 billion. The U.S. Receivable Purchase Program (RPP) saw its portfolio surpass USD 70 million, with expectations to reach at least USD 290 million by year-end. Total consolidated revenue reached a record $30.1 million, up 6% from the previous year, driven by an expansion of the net interest margin (NIM), which increased by 23 basis points. Earnings per share, excluding certain items, were $0.28. The bank's Canadian operations continued to be the primary revenue driver, while U.S. operations experienced a 22% sequential revenue increase. VersaBank also announced a structural realignment to align with the U.S. bank framework, anticipating cost reductions and risk mitigation. The bank's CET1 ratio rose to 14.28%, and they anticipate further growth in their core earnings due to ongoing positive trends in credit assets and net interest margins.Versabank Financial Statement Overview
Summary
Versabank demonstrates strong financial health with robust revenue growth and profitability. The balance sheet is solid with a favorable Debt-to-Equity Ratio and improved ROE. However, attention is needed on managing liabilities growth and ensuring consistent cash flow performance.Income Statement
Versabank has demonstrated strong revenue growth and profitability, with a significant increase in Total Revenue from prior periods. The TTM (Trailing-Twelve-Months) Gross Profit Margin is robust, and Net Profit Margin has also improved, indicating efficient cost management. However, the volatility in EBIT and EBITDA margins suggests potential fluctuations in operational efficiency.82
Very Positive
Balance Sheet
The balance sheet shows a healthy equity buffer with a favorable Debt-to-Equity Ratio, indicating prudent leverage management. The Equity Ratio is stable, reflecting a solid asset base relative to liabilities. Return on Equity (ROE) has improved, showcasing effective use of shareholder funds. However, the potential risk lies in the increasing total liabilities, which may impact future financial flexibility.78
Positive
Cash Flow
Operating Cash Flow is strong, supporting a healthy Free Cash Flow position. The Free Cash Flow to Net Income Ratio indicates efficient cash conversion from earnings. The Free Cash Flow Growth Rate has been positive, though the Operating Cash Flow to Net Income Ratio shows some volatility, suggesting potential challenges in consistent cash generation.75
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 299.85M | 294.40M | 108.03M | 82.39M | 65.36M | 54.19M |
| Gross Profit | 113.90M | 111.63M | 108.64M | 82.39M | 65.36M | 54.19M |
| EBITDA | 42.71M | 57.43M | 59.43M | 34.49M | 32.52M | 27.90M |
| Net Income | 28.77M | 39.75M | 42.16M | 22.66M | 22.38M | 19.41M |
Balance Sheet | ||||||
| Total Assets | 5.48B | 4.84B | 4.20B | 3.27B | 2.42B | 1.94B |
| Cash, Cash Equivalents and Short-Term Investments | 621.40M | 226.21M | 132.24M | 88.58M | 271.52M | 257.64M |
| Total Debt | 105.01M | 105.54M | 110.62M | 109.42M | 100.39M | 16.72M |
| Total Liabilities | 4.95B | 4.44B | 3.82B | 2.92B | 2.08B | 1.69B |
| Stockholders Equity | 528.14M | 399.20M | 377.16M | 350.68M | 332.11M | 255.29M |
Cash Flow | ||||||
| Free Cash Flow | 147.79M | 254.13M | 94.36M | -33.23M | -108.32M | 139.35M |
| Operating Cash Flow | 148.36M | 272.70M | 104.55M | 57.46M | -108.31M | 139.59M |
| Investing Cash Flow | -17.71M | -157.58M | -28.14M | -141.61M | -8.44M | 9.76M |
| Financing Cash Flow | 91.08M | -23.33M | 823.25M | -6.30M | 131.40M | -30.85M |
Versabank Technical Analysis
Positive
17.66
Price Trends
15.83
Positive
15.70
Positive
16.51
Positive
Market Momentum
0.58
Negative
66.80
Neutral
75.51
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:VBNK, the sentiment is Positive. The current price of 17.66 is above the 20-day moving average (MA) of 16.74, above the 50-day MA of 15.83, and above the 200-day MA of 16.51, indicating a bullish trend. The MACD of 0.58 indicates Negative momentum. The RSI at 66.80 is Neutral, neither overbought nor oversold. The STOCH value of 75.51 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:VBNK.
Versabank Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | C$1.46B | 10.77 | ― | 5.71% | -9.93% | ― | |
73 Outperform | $574.28M | 18.62 | 6.07% | 0.57% | 4.19% | -46.14% | |
73 Outperform | C$860.08M | 11.72 | 11.50% | 7.49% | 12.10% | -18.24% | |
70 Neutral | C$628.10M | 14.45 | 6.37% | 9.09% | -10.69% | -28.58% | |
68 Neutral | C$558.19M | 11.07 | ― | 7.88% | -11.04% | 0.44% | |
67 Neutral | C$451.13M | 11.87 | ― | 8.32% | -0.92% | 4.84% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% |
* Financial Sector Average
TSE:VBNK
Versabank
17.66
-0.30
-1.66%
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TSE:FC
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1.55
14.45%
TSE:MKP
MCAN Mortgage
21.62
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30.63%
TSE:TF
Timbercreek Financial
7.59
0.13
1.74%
Versabank Corporate Events
Executive/Board ChangesPrivate Placements and FinancingBusiness Operations and Strategy
VersaBank Expands RPP with Securitized Financing Solution
Positive
Aug 15, 2025
VersaBank has expanded its Receivable Purchase Program (RPP) in the United States and Canada by launching a securitized financing solution, aiming to capitalize on the demand for lower-cost securitized financing. This strategic move is expected to generate additional asset and earnings growth, strengthen relationships with financing partners, and enhance the bank’s market position in both countries. To support this initiative, VersaBank has appointed Timothy Comiskey, a veteran in capital markets, to lead the expansion in the US.
The most recent analyst rating on (TSE:VBNK) stock is a Buy with a C$18.00 price target. To see the full list of analyst forecasts on Versabank stock, see the TSE:VBNK Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.